In this decision Ms. Brenda Dennis was employed by the Ontario
Lottery and Gaming Corporation (OLG) for more than 13 years as a
security manager, when the OLG dismissed her without cause. A
severance package was offered to Ms. Dennis, which included 53
months' pay, outplacement services. She was given the option of
receiving severance payment in the form of a salary or as a lump
After Ms. Dennis accepted the severance package, the OLG
discovered that there were funds missing from a ticket fundraising
initiative, that the OLG's social committee had with
Canada's Wonderland. There was a shortfall of $1,024.00 and Ms.
Dennis was charged criminally with theft and breach of trust. It
was discovered that Ms. Dennis fell victim to an overseas fraud
scam, where she had transferred $15,000.00 of her own money. She
argued that she took $1,024.00 from the employer, with the
intention of paying it back. The charges were eventually withdrawn
by the Crown, conditional on Ms. Dennis giving an apology.
When the OLG was notified that the charges were withdrawn, it
refused to pay the severance package. The OLG conducted its own
internal investigation. It was concluded that Ms. Dennis did commit
theft, and she was advised that her dismissal was now for
The OLG argued that "there was a material and fraudulent
nondisclosure of the cash shortfall by the plaintiff at the time of
the severance settlement. The OLG claims in retrospect that such a
disclosure would have made the termination 'for
cause'." [para 58] Additionally, the OLG argued that Ms.
Dennis readily admitted to the theft and admitted it in court.
However, the Court found that the OLG investigation was flawed,
and that the final investigation report was "superficial and
inaccurate." [para 61] The conclusions drawn in the
investigations were unsupported, as they were based on the
assumptions made by the police in the initial investigation. [para
61] The OLG did not review the court transcripts from when Ms.
Dennis appeared in court on the charges. If they had, they would
have known that the Crown withdrew the charge, and Ms. Dennis did
not admit to any criminal wrong doing.
The Court held that it was disproportionate to terminate Ms.
Denis for cause because:
Ms. Dennis continued to state that she intended to repay the
money before it was due to Canada's Wonderland;
The arrangement with Canada's Wonderland was not part of
Ms. Dennis' regular employment duties at OLG;
OLG's internal investigation was inadequate.
Ms. Dennis was entitled to enforcement of the termination
without cause and the settlement that she was originally offered by
OLG, plus interest.
What does this
mean for employers?
Employers can rely on after-acquired cause, to set aside a
severance agreement. However, to justify the summary dismissal of
an employee, the employer must prove that the new evidence of
misconduct would amount to just cause.
Employers must ensure that the employee's misconduct, which
was discovered post termination, would in fact amount to just cause
if the employee had not been dismissed. Additionally, employers
must ensure that their investigation of the misconduct is
independent and thorough. This will assist in supporting the
employer's position in court when alleging after-acquired
cause. There is a high threshold that employers have to meet in
convincing the court, since settlement agreements are taken very
seriously by the courts for public policy reasons. Settlement
agreements are meant to be final, however the court has the
discretion to refuse to enforce the settlement agreement if
enforcing it would create a clear injustice.
The lawyers at CCPartners can advise employers whether or not
employee misconduct would amount to after-acquired cause. We can
also help to conduct independent and thorough employer
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informational service for our clients and other interested parties.
It is not intended to constitute legal advice, a complete statement
of the law or opinion on any subject. Although we endeavour to
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information provided without a thorough examination of the law
after the facts of a specific situation are fully considered.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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